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Competitive Exams Accountancy: Bank Reconciliation

Statement
Bank Reconciliation Statement
Reconciliation of Bank Accounts
Reconciling the Company's Bank Accounts with the Banker's Statement is a fundamental and
regular task of Accounting. First, there should be the ability to ‘check back’ the correctness of
the reconciliation. This has been done, by marking the ‘Bank Date’ against the voucher. For
instance, if you have issued a cheque on 8th April, which was ultimately cleared by your Bank on
19th April, you would set the ‘Bank Date’ for the voucher to be 19th April. This means, that when
you next need to ‘check back’ whether the entry made by you is correct, you will only need to
verify the Bank Statement of the 19th.

Second, that you should be able to ‘recover’ the reconciliation as of any date. This is of crucial
importance to Auditing. The Bank Reconciliation is one of the pre-requisites of Auditing and
verification of the correctness of accounts at the year end. However, it is not a ‘real-time’ task in
the sense, that it is not done by the auditor's on the first day of the next year. This means, that
the reconciliation made on 31st Mar, should be ‘viewable’ even in August, by when almost all the
cheques would have subsequently been marked as reconciled. This has again been achieved
using the concept above:

Bank Accounts may have a different ‘Starting Date’ for reconciliation purposes. When you create
a Bank Account, you are requested to give an ‘Effective Date for Reconciliation’ just before the
Opening Balance. Normally, this would be the ‘Books Beginning from’ date itself. However, you
could have imported data from a previous version of Tally or from any other system where the
reconciliation process was not available or was different. In that case, you may not wish to
reconcile the bank account with your bank statements from the very beginning. Give the date
from which you want the reconciliation facility to be activated. Then, previous entries will not
appear for reconciliation, but will be taken as a reconciled Opening Balance.

A quick experiment with Reconciliation will show you what is meant. Here is how you go about
it:

Bring up the monthly summary of any Bank Book. You could do this from the Balance Sheet,
Trial Balance, or Display/Account Books/Bank Books, and selecting a Bank.

Bring you cursor to the first month typically April, and press Enter. This brings up the
Vouchers for the month of April. Since this is a Bank Account, an ‘additional’ button F5:
Reconcile will be visible on the right. Press F5.

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The display now becomes an ‘Edit’ screen in ‘Reconciliation’ mode. The primary components
are: A column for the ‘Bankers Date’

The ‘Reconciliation’ at the bottom of the screen, showing:

Balance as per Company Books

Amounts not reflected in Bank

Balance as Per Bank

The Balance as per Company Books reflects your Balance as on the last date in our example
case, 30-Apr.

The Amounts not reflected in Bank is the debit and credit sums of all those vouchers whose
Bank Date is either BLANK, or GREATER than 30-Apr i.e.. These vouchers have not yet been
reflected in the Bank Statement.

The Balance as per Bank is the Nett effect of your Book Balance offset by the amounts not
reflected in the Bank which should equal the balance in the Bank Statement. Of course, some
variation may persist due to entries made in the Bank Statement which you have not yet entered
in your Books but since you WILL definitely enter them, and only then print your reconciliation,
it will ultimately reflect the correct balance.

You will find, as you mark off the individual vouchers by setting the ‘Bank Date’ that the
Reconciliation at the bottom of screen keeps reflecting those changes instantly. When you are
finished, press Ctrl + A or press Enter as many times as necessary to skip over the unmarked
vouchers, and accept the screen. If your screen has a largish number of vouchers it may take
some time to complete the acceptance be patient.

The next time you come for reconciliation, you will be presented only with those vouchers which
remain unreconciled.

Thus, the task keeps becoming simpler.

Making of Bank Reconciliation Statement by Yourself

Bank reconciliation statement tells the reason why your cash books bank column is not
matching with your bank pass book

For making bank reconciliation statement, if you have deemed balance of cash book as base the
see bank account and if the bank accountant has not passed any voucher entry then all entries
must have to be according to our bank pass book for this I am doing some practical example
solve ±

Bank as per cash book xxxxx-

1st Event: Add cheque issue but not yet presented. It means bank Accountant Has not passed
entry of payment xxxx-

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2nd Event: Less Cheque deposit but not cleared By bank It means our balance is Not
increased in bank account, so We should also see it and less from Our cash book balance xxxx

3rd Event: Less Bank charges debited by bank but not recorded in cash book It means bank
decreased our balance For their expense so we should also less These bank charges xxxx

4th Event: Add Dividend collected by bank credited in pass Book It means bank increased
our balance But we have no contact, so when we get this Information from our pass book, we
should Add in our cash book balance xxxx

5th Event: Less Insurance premium paid by bank Because, we have given the order to bank
That he can pay directly, so bank paid and Our balance is decreased, so we should Also less
our balance xxxx

6th Event: Less Customer's cheque dishonoured by bank not recored in cash book xxxx

7th Event: Add Wrong Credit Given by bank It means bank has increased our bank balance
so for matching our cash book we must add this amount in our cash book bank column xxxx

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